Justia Government & Administrative Law Opinion Summaries

The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) that valued the land underlying the North Bank Condominiums in Franklin County for tax year 2013. The BTA adopted the value found in an appraisal report submitted by the Columbus City Schools Board of Education (BOE). The unit owners appealed, arguing that the BTA should have adopted the land value in their appraisal report rather than the higher value in the BOE’s appraisal report. The Supreme Court affirmed, holding that the BTA did not abuse its discretion in finding the BOE’s appraisal to be more probative and in thus adopting the land value found in the BOE’s appraisal. View "NWD 300 Spring, LLC v. Franklin County Board of Revision" on Justia Law

If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

At issue in this appeal was a judgment dismissing an action seeking to recover money unlawfully collected by the City of Pocatello from users of the City’s water and sewer systems. In 2005, the city government decided that the City should be able to operate its water and sewer systems at a profit like private utilities. By law, the City was required to charge and collect sufficient fees so that its water and sewer systems “shall be and always remain self-supporting.” Those fees had to be sufficient to pay when due all bonds and interest as required by Idaho Code section 50-1032(a) and “to provide for all expenses of operation and maintenance of such works . . . , including reserves therefor,” as required by Idaho Code section 50-1032(b). The City wanted to obtain a profit in excess of the amounts necessary for the water and sewer systems to remain self-supporting. This profit was paid into the general fund. The City instituted a program called "PILOT," which stood for payment in lieu of taxes, under which city-owned water and sewer departments paid "property taxes" to the City as if they were private entities, and the departments then passed this cost on to their customers. The “property taxes” were then paid into the City’s general fund. Plaintiffs sought a refund of the PILOT sums that they had paid. In granting summary judgment, the district court held that the imposition of the PILOT was not a compensable taking. The district court appeared to rely upon two grounds for that decision: (1) "Some courts have made that determination on the grounds that money is not 'property' within the meaning of the Takings Clause," and (2) "Other courts ‘have concluded that governmental-imposed obligations to pay money are not the sort of governmental actions subject to a takings analysis.?” The Idaho Supreme Court determined both of these rationales were incorrect, reversed and remanded for further proceedings. View "Hill-Vu Mobile Home Pk v. City of Pocatello" on Justia Law

The City of Rutland appealed a superior court decision that two buildings owned by the Rutland County Parent Child Center (RCPCC) were exempt from property taxation. The City argued neither property met the requirements of the public use tax exemption in 32 V.S.A. 3802(4). RCPCC is one of fifteen parent-child centers in Vermont. Under the statutory definition, a parent-child center is a “community-based organization established for the purpose of providing prevention and early intervention services." The superior court determined on summary judgment that RCPCC’s properties did not qualify for the public school tax exemption but, after a bench trial, decided that RCPCC’s use of the properties in question met the three-prong public use exemption test from American Museum of Fly Fishing, Inc. v. Town of Manchester, 110, 557 A.2d 900 (1989), and that, accordingly, both properties were exempt from property tax assessment. The Vermont Supreme Court found that RCPCC's use of the buildings met all elements of the American Museum of Fly Fishing's test, and affirmed the superior court's judgment. View "Rutland County Parent Child Center, Inc. v. City of Rutland" on Justia Law

Kohl’s Department Stores, Inc. entered into a license agreement with Kohl’s Illinois, Inc., an affiliate of Kohl’s that operates retail stores in select states, but not Virginia, for the use of intellectual property managed and licensed by Kohl’s Illinois. Kohl’s paid royalties to Kohl’s Illinois, and when calculating its federal taxable income, Kohl’s deducted these royalty payments from its income as an ordinary and necessary business expense. Kohl’s Illinois, however, did not pay state income taxes on a substantial portion of the royalties. Kohl’s claimed that the royalty payments fell within the “subject-to-tax” exception to the add back statute. The Virginia Department of Taxation auditor required that the untaxed portion be added back to Kohl’s taxable income and issued a notices of assessment to Kohl’s for certain taxable years. The circuit court affirmed, concluding that only the portion of the royalties that was actually taxed by another state fell within the subject-to-tax exception. The Supreme Court reversed, holding that the circuit court erred by failing to hold that Kohl’s Illinois need not be the entity that pays the tax for the subject-to-tax exception to apply. Remanded for a determination of what portion of the royalty payments was actually taxed by another state and therefore excepted from the add back statute. View "Kohl's Department Stores, Inc. v. Virginia Department of Taxation" on Justia Law

This appeal presents a narrow question of law relating to state income tax liability. Zippora Stahl was an Idaho resident who died in 2010. At the time of her death, Stahl owned real property located in Chino, California that had substantially appreciated in value. The Estate made a "1022 Election" following the sale of the Chino property in its 2012 federal income tax return. The Estate also filed an Idaho income tax return for 2012. When it did so, the Estate initially used the same modified carryover basis for the Chino property as it had for its federal income tax return. The Estate computed its state tax liability as $1,029,107, which the Estate paid. The Idaho State Tax Commission processed the Estate’s 2012 Idaho income tax return and determined that the Estate had incorrectly computed a credit for taxes paid to other states. Kathleen Krucker, personal representative of the Estate, appealed the district court’s grant of summary judgment in favor of the Commission and the district court’s denial of the Estate’s motion for reconsideration. The district court held that the Estate could not use a different figure as the starting point for calculating its Idaho taxable income for 2012 than it reported to the Internal Revenue Service for that year. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Krucker v. Idaho State Tax Commission" on Justia Law

In a 2005 Cooperation and Option Agreement to facilitate Russell's construction and operation of the Energy Center, a natural gas-fired, combined cycle electric generating facility in Hayward, the city granted Russell an option to purchase 12.5 acres of city-owned land as the Energy Center's site and promised to help Russell obtain permits, approvals, and water treatment services. Russell conveyed a 3.5-acre parcel to the city. The Agreement's “Payments Clause” prohibited the city from imposing any taxes on the “development, construction, ownership and operation” of the Energy Center except taxes tethered to real estate ownership. In 2009, Hayward voters approved an ordinance that imposes “a tax upon every person using electricity in the City. … at the rate of five and one-half percent (5.5%) of the charges made for such electricity” with a similar provision regarding gas usage. Russell began building the Energy Center in 2010. In 2011, the city informed Russell it must pay the utility tax. The Energy Center is operational.The court of appeal affirmed a holding that the Payments Clause was unenforceable as violating California Constitution article XIII, section 31, which provides “[t]he power to tax may not be surrendered or suspended by grant or contract.” Russell may amend its complaint to allege a quasi-contractual restitution claim. View "Russell City Energy Co. v. City of Hayward" on Justia Law

Prior to its dissolution, Culver City’s former redevelopment agency made an unauthorized transfer to the City of about $12.5 million. The Department of Finance (DOF) discovered the unauthorized transfer after the former redevelopment agency was dissolved and the City took over as the successor agency. Based on that discovery, DOF authorized the county auditor-controller to reduce by about $12.5 million the tax increment revenue made available to the successor agency to pay the successor agency’s enforceable obligations. In a prior action, the Sacramento Superior Court held that the former redevelopment agency should have retained the $12.5 million to pay its bills rather than transferring it to the City. DOF did not seek an order requiring the City to repay the $12.5 million. And neither party appealed the superior court’s judgment. Since judgment was entered in “Culver City I”, the City has not repaid the $12.5 million to the successor agency, and DOF has continued to authorize successive reductions to the allotment of tax increment revenue to the successor agency to pay its enforceable obligations. DOF asserts that those funds held by the City are available to the successor agency for payment of its enforceable obligations, but the City maintains that it has no duty to pay the money back. In this action, the City, both in its municipal capacity and as the successor agency of the former redevelopment agency, sought mandamus relief to stop DOF’s successive reductions of tax increment revenue to pay the successor agency’s enforceable obligations. DOF sought an order reversing the former redevelopment agency’s transfer of $12.5 million to the City and requiring the City to return the money. The superior court in this action held that DOF’s successive reductions were not authorized by the Dissolution Law. Based on this holding, the superior court granted the City’s petition for writ of mandate. While recognizing Culver City I’s holding that the former redevelopment agency’ss transfer to the City was unauthorized, the superior court denied DOF’s petition for an equitable writ of mandate requiring the return of the money because there was a statutory remedy for this situation. The State Controller conducted a review and ordered the City to return the $12.5 million to the successor agency. DOF appealed, asserting that the superior court erred by: (1) denying DOF’s petition for writ of mandate directing the City to return the money and (2) finding that successive reductions to the tax increment revenue provided to the successor agency for the same $12.5 million held by the City was not authorized by the Dissolution Law. The Court of Appeal affirmed. View "City of Culver City v. Cohen" on Justia Law

Minnesota’s water’s edge rule, Minn. Stat. 290.17(4)(f), does not prohibit the inclusion in “net income” the income of a foreign entity that elects under federal tax law to be disregarded as a separate entity.At issue in this appeal from the tax court was whether the consequences of an election made under federal tax law by a foreign entity owned by Ashland Inc., a domestic unitary business, must be recognized in determining Ashland’s Minnesota tax liability. The Commissioner of Revenue concluded that the income and apportionment factors of the foreign entity were improperly included in Ashland’s combined return and so excluded them in calculating Ashland’s Minnesota tax liability. The tax court granted Ashland’s motion for summary judgment, concluding that the consequences of the federal election were properly included in the determination of Ashland’s net income on its Minnesota tax returns. The Supreme Court affirmed, holding that the tax court did not err in its conclusion. View "Ashland Inc. & Affiliates v. Commissioner of Revenue" on Justia Law

The Administrative Hearing Commission erred in finding that the St. Louis Rams did not have to pay sales tax on the entertainment license tax (ELT) they included and collected from ticket purchasers as the amount paid for admission during certain periods from 2007 through 2013. The Commission (1) ordered the director of revenue to issue a refund to the Rams for the ELT included in the period from February 2007 through January 2010; and (2) found the Rams were not liable for sales tax based on the ELT collected and remitted from February 2010 through January 2013. The Supreme Court reversed the Commission’s decision and remanded the cause for further proceedings, holding that the Commission erred in finding the portion of the ticket sales the Rams used to pay the ELT was not subject to sales tax because the ELT was included in the amount ticket purchasers paid for admission via the fixed ticket price charged by the Rams. View "St. Louis Rams LLC v. Director of Revenue" on Justia Law